Business Strategies: In the Light of Theories and Instances - Essay Example

?Business Strategy Table of Contents Business Strategy Table of Contents 2 Introduction 3 Business Strategies: In the Light of Theories and Instances 3 Conclusion 9 Reference 10 Bibliography 12 Introduction In today’s contemporary business environment, strategy has been one of the significant attributes to define the success of any organisation. However, there has been a considerable debate on the appropriate strategy framework of an organisation. For an instance, a strategy which seems to be proper and successful for any retail organisation may not be so successful for any manufacturing unit. Moreover, different organisations can have different macro and micro environment, which are pretty influential to shape up the strategy of any company. Moreover, a company builds up its strategies on its strength to get hold of new opportunities by driving away the threats and reducing the uncertainties. It cannot be denied that various organisations can have their strengths in different arena while their core competitive advantages would be different from one another. In such a case, it would be pretty wrong to think that one strategy would fit for all the organisations. Strategies are bound to change with the changing external and internal environment, the influential elements in an industry and the changing intensity of the competition in the market. Strategies are also expected to change with the changing supply and demand scenario in a specific industry. It cannot be said that one successful strategy would work for another company, even if it is dealing in the same industry. This report would look at various business strategies in the light of a number of renowned companies to prove the fact that the strategies would be different for different companies. Business Strategies: In the Light of Theories and Instances The success of every organisation is led by a superior strategy. To establish the fact, the first example would be taken from the leading retail organisation, Tesco Plc. In the year 2006, the organisation emerged as the leading grocery retailer in UK with some 30 percent market share. Starting from the year 2002, the company has been able to almost double its group sales and profit value. Now, the company is not only a leading retailer in UK, it has also emerged as one of the leading retail companies across the globe. The company has a detailed focus towards the successful fulfilment of the customers’ expectations and requirements. The company keeps a wide range of leading brands offering enhanced value and quality to the customers to satisfy the different requirements and tastes of its customers. The company does not offer standardised products to all its customers; rather, the company puts an increasing amount of effort to tailor its offerings to its local customers. For an instance, Tesco has started a new store in Berkshire which has included more than 900 customised Asian products to meet the requirements of the local customers. The company also tries to format its stores in such way to meet the different requirements of the customers. The customers want to do their shopping in the large stores and small stores. With the increased internet usage, the customers are now getting more indulged in online shopping. Tesco has started off a number of different stores to meet the different customer requirements. The organisation has introduced Tesco Express to offer enhanced food products at low prices to its customers in the heart of the neighbourhoods. Another superstore ‘Metro’ has offered the expediency of Tesco in the city centres and towns where a considerable number of people stay and work. At the Tesco superstores, the customers can find products according to their requirements for weekly shopping. In the ‘Extra stores’, the customers can find entire range of products including food and non-food products. So, the company keeps detailed focus on the different customer requirements (Anonymous, 2006). In the year 1980, Porter has introduced the concept of ‘Generic Strategy’. Organisation can have strategies based on cost leadership and product differentiation objectives. For an instance, in gasoline retail industry, the customers are exceptionally sensitive to the product prices. Such a scenario has made the situation more competitive for the existing players forcing them to slash the prices to reduce the profits as much as possible. (Source: Dostaler & Flouris, n.d., p.1) In the book, ‘The Competitive Advantage of Nations’, Michael Porter had explained how the Japanese, Scandinavian, Chinese and Korean ship builders used to successfully pursue their operation based on four of these generic strategies. However, the British and Spanish ship builders failed because they got stuck in the middle of strategies. The same is also pretty true for the low cost airlines. Airline like EasyJet and other players in the industry develop their strategies to take cost leadership among the players. Although, according to Porter, pursuing both the cost leadership as well as product differentiation at the same time can happen only under some exceptional situations (Murry, 1998), Miller suggested that a much broader and mixed approach towards these generic strategies would be more preferable to succeed (Miller, 1992). In addition to this, a number of authors think that in today’s competitive world, both of these strategies cannot be mutually exclusive. According to them, the organisations dealing in the mature industry sectors can rejuvenate and regain the growth by moving towards product differentiation through innovation, while conserving the strengths in cost reduction as well as process efficiency. For an instance, in the wake of the recent recession, a number of companies have found various ways to cut their costs. As a consequence, these organisations also preferred low cost airlines for business travels. In such a case, scheduled airlines such as British Airways also found it tough to compete with the low cost airlines. In a response, even in the near future, these scheduled airlines would have to be more focused on the product differentiation with due effort to be cost effective. Southwest Airlines has successfully coped with the economic turmoil because they integrated both the differentiation and cost leadership strategy. This enabled the company not only to offer low fares to the customers but also to have fewer complaints than the major carriers in the industry. The airline has been doing well by treating the customers with its on- time performance. Therefore, the organisation seemed to attain product differentiation and cost leadership almost simultaneously (Dostaler & Flouris, n.d.). A number of companies base their strategies on the competitive advantages they have over its competitors. Most of the times, these competitive advantages are the resources that the company possesses. These resources can be defined as both the tangible as well as intangible assets of the firms including brand name, skilled human resource, required technical knowledge, machinery, capital, trade contracts, patents and efficient procedures (Wernerfelt, 1984). Sustainable competitive advantage is supposed to emerge from the ownership of capability differentials starting from licenses and patents to the organisation’s reputation and employee know-how (Hall, 1992). Innovation and organisations hierarchy are two most significant resources which have emerged as the core competency of 3M Corporation. The organisation has extended its business starting from sand paper to some floppy disks including more 30,000 different products in its portfolio. This wide product range of the company is based on its technical ability and its excellence in managing the development and selling of these new products (Itami & Noto, 2007). Undoubtedly, the company has excelled in the innovation of its products its various ways. Innovation has become a cultural routine in the organisation where the organisational hierarchy has encouraged the employees to get into more innovation and creativity. eBay is another leading name which has emerged as the survivor of the dot com bust in the late 90s. The organisation has established its success with the introduction of a business model based on the internet. The company personnel think that the key significance of their success is the capability to listen to the customers. The strategy is to keep up with whatever the customers would like to buy, sell and how they would like to do the same. Technological enhancements are another things leading eBay towards success. Its technology has allowed it to trace each of the potential customers leading to accumulation of enriched and beneficial information for the company. However, it also changes its strategies with the changing business environment. With the internet emerging as a more competitive area of business, in the year 2005, the organisation bought Skype, an internet telephony organisation. This was done to develop a supreme e-commerce engine. Even in the year 2002, the company took over PayPal, an online payment company. The company has made huge revenue in its business due to this purchase (Shepherd & Fraser, n.d.). Another leading organisation is Nestle, which has excelled in the food and beverage products. The company has positioned itself as food, health and wellness organisation. The organisation is segmented into different business units committed for different business functions. For an instance, the Nestle nutrition has been established to strengthen its core nutrition business. The strategy has been successful in the wake of customers’ nutritional requirements and expectations from the food products. As the market is getting more competitive, companies like Nestle have been looking forward to the localisation of the global products in the local markets. Proper implementation of various strategies with more flexibility to fit in the local market scenario has been one of the significant strengths of the company. The company puts its effort to pursue its global strategies through local adaption. In China, the company has showed an interesting example of such local adaption. Nestle entered in China back in the year 1987. However, after entering in the nation, the company realised that the inadequate transportation and infrastructure can be a barrier to its distribution and supply chain network. The company started off with its own plan to establish new roads and an enhanced distribution network. That seemed to be an expensive solution; however, the organisation realised its long term consequences. The company also customises its products using local ingredients to satisfy the tastes and requirements of the local people in the foreign countries (Finntrack, n.d.). On the other hand, Unilever sells off its products with minimal local adaption. This is done in the process to build up a global brand with adopting centralised operation. According to the organisation, this would help the company to build up its global image by focusing more on brand image and reputation. The strategy has been successful with the establishment of strong brand names like Dove, Rexona, Sunsilk and Lux. However, the company has also taken good care of the local roots. In certain cases, it has changed its strategies to mix the international expertise with the local employees to accelerate communication with the customers. The organisation has always tried to equalise both the local and global requirements to satisfy the local customer demands (ICMR, 2004). According to Camillus, strategy is a wicked problem. As per him, companies base their strategies focusing on their customers and strategies; however, in the process, they still ignore some of the complexities coming their ways. This is wicked because in the process, the search for solutions would never end (Camillus, 2008). Complexities would come and companies are required to modify their strategies according to them. Conclusion It can be said that the process to develop a successful strategy seems to be never ending. Wal-Mart and Dell have their excellent strategies in place and both of them are undoubtedly successful today. However, there is no surety that these organisations are going to be successful even in the future. To be successful, even in the future, the companies will be required to build up superior strategies for a better tomorrow. The strategy can be developed through intuition, luck or some trial and error methods. It may bring luck once, but probability is pretty low that this would be bringing luck for the second time (Markides, 1999). The companies are required to understand the building blocks of various successful strategies along with the logic behind those. This would help the companies to come up with a superior strategy when the current strategy would become obsolete in tomorrow’s market. Reference Anonymous. 2006. Tesco Conquers the World?. Camillus, C. J. May, 2008. ‘Strategy as a Wicked Problem’. Harvard Business Review. Dostaler, I. & Flouris, T. No Date. Business Strategy and Competition for the Future in the Airline Industry. [Pdf]. Available at: http://www.aerlines.nl/issue_28/28_Dostaler_Flouris.pdf [Accessed on March 09, 2011]. Finntrack. No Date. Nestle: Global Strategy. [Pdf]. Available at: http://courseware.finntrack.eu/mba/mb210/intbus/hill4e_506_509.pdf [Accessed on March 09, 2011]. Hall, R. 1992. ‘The Strategic Analysis of Intangible Resources’. Strategic Management Journal. Vol.13: 135-144. ICMR. 2004. Unilever's Strategies in China. [Online]. Available at: http://www.icmrindia.org/casestudies/catalogue/Business%20Strategy2/BSTR131.htm [Accessed on March 09, 2011]. Itami, H. & Noto, L. 2007. Analyzing Resources and Capabilities. [Pdf]. Available at: http://www.blackwellpublishing.com/grant/files/CSAC05.pdf [Accessed on March 09, 2011]. Markides, C. C. 1999. ‘In Search of Stratgey’. Sloan Management Review. Miller, D. 1992. ‘The Genric Strategy Gap’. The journal of Business Stratgey. Murray, I. A. 1988. ‘A Contingency View of Porter’s Generic Strategies’. Academy of Management Review. Vol. 13: 390-400. 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